Sunday, September 29, 2013

Emerging Asia's shares may have plunged recently, but with the bull market getting long in the tooth, it's not the time to buy, said Marc Faber, the publisher of the Gloom, Boom & Doom report.

"I don't think there's a lot of money to be made in equities for the next 12 to 24 months," Faber, also known as Dr. Doom, told CNBC.

"We are in a bull market that is more than four years old," with the rally beginning in March 2009, he noted. "Four years into the economic expansion, I don't think that stocks are the greatest bargain anymore."

Friday, September 27, 2013

A deflationary bust, whenever it may happen, it may only happen in 10 years, but it would seem to me that this will be the eventual outcome. It could also happen tomorrow or in 10 years. It is the opposite of an increase in asset prices from inflation. If you look at how asset prices have increased since 1980, it has been highly irregular. Stocks rose strongly until 1987, then they had a setback. After ’87 some markets made new highs but others didn’t. Then you have some regions like Latin America doing particularly well between 1988 and 1994. Growth shifts around and asset prices rise, but with different intensity. We had a collapse in the NASDAQ, but other stocks continued to go up until 2007, whereas the NASDAQ was still 50% below its high and is still today even 40% below its high in 2000. So I think in a collapse what happens is that, over time, everything goes down but some things go down more than others. Traditionally I would say the best thing in a collapse is to hold cash. But then the question arises about what kind of cash you should hold and in what form. Because if you have bank deposits, and I think what happened in Cyprus is a blueprint, maybe you have bank deposits and maybe not all of it will be paid to you. In some sovereign countries, maybe it will be paid to you and in others not, depending on the quality of the banking system. But in general if there was a collapse, then I think all banks would suffer. Then I would imagine that cash would not be the safest investment. And then the currency choice is also important. Would you put all of your money into US dollars? Yeah maybe the US dollar will be strong for another 3 months, maybe another 3 years, but maybe eventually it will be a very weak currency as I expect. Then maybe you turn around and say, “Well, weak, but weak against what?” Maybe not against the others because all of the others also print money. The dollar, paper money, may be weak because they all print and purchasing power will all go down in concert. So maybe gold is part of the solution, and maybe you would need to own some real estate and then you have to think “OK, real estate, but where?” If you lived in Germany in 1900, and we are now 2013, if you had all of your money in cash, you lost your money 3 times: in World War I, then hyperinflation, then in World War II, so cash was not a desirable alternative nor government bonds which were also lost 3 times. If you owned shares in the leading German companies, most of them are still in business, they may not have been the best investments, but you still have these shares so you preserved your wealth. If you had real estate, then the question arises, if your grand-parents had the bad luck to own the real estate in East Germany, you lost it all after World War II, but if you have the fortune to have it in West Germany, then you are ok. So to people who say that real estate is safe, yes, to some extent, but you also need to diversify, it is like a stock portfolio. You should not necessarily put all of your money in one stock, but you should have a diversified portfolio because companies also die and go out of business eventually. When I started to work in 1970, 2 of the most respected companies to buy and put in a drawer and never look at again were Polaroid and Kodak and both are out of business. So there is the question of obsolescence and the same happens to real estate; for political reasons you may lose it.

So I would say we do not know how the world will look in 5 or 10 years, nobody has a clue. There are some people that will say that it will look this way or that way. I am very skeptical of any forecasts, especially long term forecasts. There are some trends that we can see about how society has changed in the last 30 years. I moved to Asia 40 years ago and I can see that Asia has developed a lot and grown a lot and we can see this. But I do not know if in 5 years or 10 years if Asia will continue to develop at the pace it developed in the last 40 years. I can see very clearly that until now, the middle class and the poor people admired the successful rich people. Now, partly under Western influence, there are some misgivings about the distribution of income and wealth. We see this very pronounced in Hong Kong and Singapore where there are a few families that own a great deal of the properties that are incredibly rich and the people pay very high rents and their real incomes, in other words incomes adjusted for inflation, have been going down. So these people ask themselves these questions and then go and demonstrate. So we have some social problems in Asia. Of course, as I have mentioned, we have some geopolitical problems in the world, obviously in the Middle East. We have this rise of the Chinese geopolitical influence in the world and the old masters, the US and Europe, they see their influence waning and they do not like it. So also there, tensions will arise.

Wednesday, September 25, 2013

I wonder what will happen one day. Let’s take the worst-case scenario. We have either a social unrest, a revolution, or war. Governments decide, “Oh, the price of gold is going up substantially, let’s take it away from people.” In other words, you expropriate it. I think it will, at that stage, not matter very much where you hold your gold, except it may matter where you hold your gold in terms of sovereign state. My sense is that the Asian countries are less likely to take the gold away than Western countries.

Saturday, September 21, 2013

Marc Faber, editor and publisher of 'The Gloom, Boom and Doom' report, says he fears that India faces a real threat of a sovereign downgrade given the worsening macro environment accentuated by a weakening rupee. He, however, says the current situation should not be equated to the 1997-98 Asian financial crisis.

Thursday, September 19, 2013

Swiss investor and economic guru,Marc Faber, joins Rick from Hong Kong to discuss the "race to the bottom" that is the universal money printing by the world's central banks and why he ultimately foresees the U.S. transitioning into a completely planned economy.

Wednesday, September 18, 2013

"My view was that they would taper by about $10 billion to $15 billion, but I'm not surprised that they don't do it for the simple reason that I think we are in QE unlimited.The people at the Fed are professors, academics. They never worked a single life in the business of ordinary people. And they don't understand that if you print money, it benefits basically a handful of people maybe--not even 5% of the population, 3% of the population. And when you look today at the market action, ok, stocks are up 1%. Silver is up more than 6%, gold up more than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline are things people need, ordinary people buy everyday. Thank you very much, the Fed boosts these items that people need to go to their work, to heat their homes, and so forth and at the same time, asset prices go up, but the majority of people do not own stocks. Only 11% of Americans own directly shares."

Tuesday, September 17, 2013

If you look to hire anybody today you will find thousands of people with MBAs and they all want to work for you. The question is, how much can they produce for you. I do not know the answer. If on the other hand, I look for a reliable electrician, carpenter, or plumber, it is very difficult to find. So I think that the generation that grew up say during the depression and in the 1950s, when a worker in America had a very high social standing and could travel to Europe, and with the prevailing exchange rate spend a lot of money in Europe. The view then became, whether it came from the government, the media, or from the workers themselves, was that a workman’s job is a lower class job. We want our children to be academics. A lot of people are not suited to be academics or they do not know how to apply the knowledge they acquired in universities, if anything is acquired, and that is a very big question. So you now have an army of people that came out of universities, and I tell you, a lot of these people I would not dream of hiring. They are completely useless. I am not saying that everybody is useless, some have a very good education and a very good personality. But the ones that I would hire I would hire them with or without a university degree. I would look at them and say, “Can they do something? Are they effective? Can they accomplish something or not?” I would not even ask them if they have a university degree, I am not interested in that.

In general, if you want to be a medical doctor, I can understand that you need to go to medical school. If you want to be an engineer or an architect, I can understand you need to go to a technical college. If you want to be a teacher, then maybe it is useful to know something and go to a university. But for most people, I do not think that education is that important. It is probably important in that, at least when I studied, you were given a job to do or a paper to do, maybe on a subject that you had no idea about. Then you had to go and study and learn about this subject. Through this you may learn how to learn and how to talk about things about which you have no clue, which is very important in business.

Sunday, September 15, 2013

I'm aware of some people, including Eric Sprott, that believe that there is manipulation in the system. Where I tend to agree with him is that maybe central banks don’t have all the gold they claim they have, because something must be funny. The Germans have asked for the gold to be returned to Germany. Why would it take eight years to do that? There’s no reason. You can do it in three months.

As I said, I don’t know, but one of the reasons I would be inclined to believe in some manipulation would be, let’s say you’re a central bank, like the Fed. You don’t have the gold that you declared and you know that you have to buy it back at some point. Then, you may wish to manipulate the price down until you can cover your short position in gold at a reasonable cost. There will still be losses, but you can cover them at a reasonable cost. That is really the only reason I could see why a central bank would want to depress the price of gold.

Friday, September 13, 2013

Worldwide, you shouldn't believe governments, period. I think you should believe market action. When markets go up, they give you a message, and when the markets go down, they give you a message. The only problem nowadays is that the messages from markets have been distorted by very significant government intervention into the free market, so you can’t rely on the information provided by the market participants any longer.

Wednesday, September 11, 2013

Marc Faber is an economic authority on global macroeconomics, capital markets, and investment and the Editor & Publisher of "The Gloom Boom & Doom Report". He spoke with The Prospect Group about university style formal education, the coming economic collapse, and the options people to preserve their wealth.